A Break In The Clouds

The markets are calmer, but the Fed's work is far from over

Are we out of the woods? Equity investors seem optimistic. The market for high-quality corporate debt is reviving. Even risk premiums on emerging-market debt have fallen a bit since the Federal Reserve cut interest rates for the second time in a month on Oct 15. Investors could almost be forgiven for thinking the worst of the market gridlock is behind us. All that talk of a liquidity crunch--maybe even the fears of an economic slowdown in the U.S.--suddenly seems almost passe.

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